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FTC files lawsuit against Amazon about in-app purchases made by children

A week ago, Amazon got itself into a spat with the Federal Trade Commission (FTC) regarding the e-commerce giant’s policies regarding in-app purchases. According to leaked documents, Amazon is even prepared to go to court. It looks like its preparedness will come in handy because the FTC has filed a lawsuit against Amazon regarding those policies.

According to the suit, Amazon allowed children to make in-app purchases without any parental consent. In addition, the FTC alleges that when Amazon began allowing in-app purchases in November 2011, there were no measures in place, such as password requirements, in order to prevent children from enlarging their parents’ credit card bills. Amazon made password entry a requirement for in-app purchases above $20 in March 2012.

“Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission,” said FTC chairwoman Edith Ramirez in a press release. “Even Amazon’s own employees recognized the serious problem its process created.”

FTC made note of one instance, where a child spent $350 on virtual items before her mom caught on. According to the FTC, in-app purchases made through Amazon are “final and non-refundable,” with the company keeping 30 percent of transactions.

The lawsuit seeks a court order that would require Amazon to issue refunds to parents whose kids accidentally made in-app purchases, as well as ban billing parents and other account holders for in-app purchases made without consent. Amazon, on the other hand, refutes the FTC’s allegations.

“We have continuously improved our experience since launch, but even at launch, when customers told us their kids had made purchases they didn’t want we refunded those purchases,” wrote Amazon associate general counsel Andrew DeVore when Amazon first caught wind of the FTC’s desire to turn the issue into a lawsuit earlier this month.

This isn’t the first time a company has come under fire for in-app purchases. Apple found itself in a similar situation at the start of the year, with the Cupertino-based company eventually agreeing to refund customers to the tune of $32.5 million. Google also made several changes to the Play Store in order to make it harder for children to make in-app purchases without permission.

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